Pay up

It’s a case that many Canadians would probably applaud: in Saskatchewan this week, a hard-working welder, injured on the job, not only defeated two insurance companies in court but a judge ordered the companies to pay millions in punitive damages for deliberately trying to cheat him out of the settlement he deserved.

Luciano Branco was injured while working for a Canadian company in Kyrgyzstan. For the last 10 years, he’s been fighting Zurich Life Insurance and American Home Assurance in court, while they offered him successive small settlements for his injuries and hoped he would simply go away.

But Saskatoon Judge Murray Acton not only ordered Zurich to pay $3 million in punitive damages — American Home must pay $1.5 million — he also said the huge award was being made to make the insurance industry sit up and take notice of its obligations.

Referring to an Ontario case where another insurer was hit with $1 million in damages, Acton said it was clear that even a million-dollar penalty wasn’t enough.

“Although Canadian courts believed that the $1 million in the Whiten case would catch the attention of the insurance industry and the court’s disapproval of such actions, it is apparent that $1 million was not sufficient,” he wrote. Saying the companies were “cruel and malicious” and chose to offer “ridiculously low” settlements, Acton upped the ante, ordering the companies to pay additional damages and costs that will easily bring the total over $5 million.

“The court is cognizant of the fact that a punitive damages award of $3 million (against Zurich) may not be particularly significant to the financial bottom line of a successful worldwide insurance company,” Acton wrote. “It is hoped that this award will gain the attention of the insurance industry. The industry must recognize the destruction and devastation that their actions cause in failing to honour their contractual policy commitments to the individuals insured.”

People dealing with insurance companies in this country occasionally have stories of fair and fast treatment; that being said, customers who have been forced to take expensive court action to get insurers to live up to their obligations are a regular occurrence in St. John’s and other cities across the country.

It seems that large insurance companies have discovered the key to large profits is to drag their feet, hoping that customers will simply give up on the protection they paid for, and are entitled to. Ask around your workplace and it’s astounding how often you will hear about insurers who nickel-and-dime claims, who drag out the process, who set arbitrary deadlines and simply terminate claims with little or no recourse beyond long and expensive trips through the courts. Insurance companies have their own lawyers, resources and all the time in the world — individuals who take them on rightly feel like Davids without slingshots.

“The fact that Branco was able to continue to withstand this pressure for so many years from two different fronts is truly remarkable and almost superhuman, even though his resistance may have resulted in irreparable mental distress which may last for the remainder of his lifetime,” Judge Acton wrote. “The question remains: how many individuals have been unable to withstand the financial and psychological pressure of these tactics?”

It’s a wake-up call that insurers should heed — and if they don’t, it’s one they should feel the brunt of again and again. And if $5 million doesn’t work, maybe the courts should try $10 million.

Eventually, the message should sink in: defaulting on your contractual obligations should not be a successful business model.